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Updated over 2 years ago,
To hold or sell (4-plex) 1.5yr ownership
Hello BP family, I currently own a fourplex in Lacey, Washington and I am looking for advice on whether to hold or sell. Here's a breakdown that may help paint the picture, thanks in advance!
Short term goals: Accumulate 200k in cash ASAP
Long term goal: 15k cash flow
Numbers:
- -Bought in October 2020; VA loan; 2.75% (2.94% APR); $6.5k in closing cost
- -Purchase Price: $685k; after funding fee total loan: $701k; currently outstanding loan: $679k
- -Since then, increased total rent from $4,200 to $5,160
- -Operating expense: $1,650 (using $200 for routine repairs/maintenance cost)
- -NOI: $3,312 (using 4% for vacancy)
- -Mortgage (P+I): $2,861; Total mortgage payment: $3,505
- -Total monthly expenses: $4,967 (using 5% for cap ex…which is conservative as opposed to 10%)
- -Monthly cash flow: $193
- -Annual cash flow: $2,313
Reasons to hold:
- -It is a stable, generally stress-free property. 3 of 4 units have been great long term tenants
- -Low interest rate at 2.75%
- -It is in a reliable area that will steadily appreciate
- -I don’t necessarily need the capital right now. In another words, I don’t have a solid plan on how exactly I’m going to deploy the proceeds.
- -I am comfortable with where this property lies between the appreciation vs cash flow scale…currently breaking even and starting to see a small cash flow.
Reasons to sell:
- -Take the gains and reinvest (~100k)
- -I can avoid paying capital gains on the proceeds entirely due to tax-free income (military deployment 2022)
- -It will free up all my VA loan entitlement allowing me to purchase a house hack at the next duty station
- -Protection in case there is a market correction.
- In my mind, the question comes down to whether building my immediate cash is more important than what the fourplex has to offer... Please let me know if there's anything else I should consider.